- On December 22, 2012
What is a Non-Practicing Entity (NPE)?
NPEs are patent owners that do not make products. Instead, most NPEs derive their revenue from licensing or enforcing patents. The types of NPEs can vary, ranging from one-person inventor trusts, to academic institution and large patent aggregators.
In litigation, NPEs generally have an advantage over operating companies (companies that make products). NPEs can assert patent lawsuits without fear of a countersuit, since they have no products that could infringe on other patents.
What is a Patent Assertion Entity (PAE)?
For the purposes of the NPE Tracker, a PAE is a non-practicing entity that asserts its patents through litigation or the threat of litigation.
What is a Defensive Patent Aggregator (DPA)?
For the purposes of the NPE Tracker, a DPA is a non-practicing entity that buys and then licenses patents to its investors or members. DPAs do not assert their patents in litigation. Instead, investors or members of a DPA can use the DPA’s patents defensively when they are sued by third parties.
What are NPE litigation trends?
The patent world is changing. Over the past few years, litigation by non-practicing entities has been on the rise. According to research out of UC Hasting and Lex Machina, patent litigation by NPEs have increased from 22% of the cases filed in 2007 to almost 40% of the cases filed in 2011.
What is the relationship between NPEs and operating companies?
In the past, many software and technology companies were often at odds with NPEs, as they were often the targets of patent litigation. Over time, the relationship between operating companies and NPEs has grown more complex.
Today, many operating companies use shell companies or other patent holding entities to license and assert their patents — in a manner similar to NPEs. As a consequence, the line between NPEs and operating companies has blurred.